Private Limited
Limited Liability Partnership
PRIVATE LIMITEED
A Private Limited Company (PLC) is a popular form of corporate entity in many countries, particularly valued for its structure, which offers limited liability to its shareholders while restricting the ownership. A PLC can be started with a minimum of two members and is capped at a maximum of 200, excluding employees and ex-employees who are shareholders. This type of company structure is ideal for small to medium-sized businesses due to its ability to raise equity funds, the limited liability it offers to its shareholders, and its continued existence irrespective of the status of its owners.
Shares of a Private Limited Company cannot be publicly traded, which adds a layer of privacy to its financial dealings and makes it less susceptible to hostile takeovers. The company must hold annual meetings and file annual returns with the relevant authorities, ensuring transparency in its financial practices. This structure is highly recommended for entrepreneurs who want to minimize personal risk and maintain control over the business.
LIMITED LIABILITY PARTNERSHIP
A Limited Liability Partnership (LLP) is a flexible legal and tax entity that combines the characteristics of partnerships and corporations. This hybrid structure provides the benefits of limited liability to its partners, meaning that they are not personally liable for any debts the business incurs or for the actions of other partners, beyond their investment in the LLP.
An LLP is particularly popular among professionals like lawyers, accountants, and consultants who want to retain the flexibility of the partnership model while enjoying the protection against liabilities. Unlike corporations, LLPs are relatively easier to set up and manage, and they are not subject to the same kind of rigorous regulatory requirements. However, they must register with the appropriate state bodies, and they are required to maintain accurate records and file annual reports detailing their financial status.
Taxation in an LLP is passed through to the partners, who include their share of profits or losses in their personal tax returns. This avoids the double taxation typically encountered in corporate structures.